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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Key Regulations

Mr. Iyer, a registered investment adviser, has a client, Ms. Rao, who wants advice on a mutual fund. Which practice by the adviser is consistent with the SEBI Investment Advisers Regulations?

The consistent practice is to profile the client's risk and ensure suitability before advising, and to maintain records of the advice given. Undisclosed conflicts, guaranteed returns and sharing client data for marketing violate the Investment Advisers Regulations and the prescribed code of conduct.

  1. AAdvising only after profiling the client's risk and suitability, and keeping records of the adviceCorrect
  2. BRecommending the scheme on which he earns commission from the AMC, without disclosure
  3. CGuaranteeing a minimum return to the client in writing
  4. DSharing the client's details with a distributor affiliate for marketing

Explanation

Investment advisers must carry out risk profiling and ensure suitability, and maintain records of advice. Undisclosed commissions, assured returns and misuse of client data breach the regulations and the code of conduct.

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